Most entrepreneurs come to investors with an “idea” or “concept”, looking to receive investor’s monies only to allow them to figure out what to do next.    This is a very misplaced approach and is guaranteed to turn investors off.  With this approach, more often than not, you will get an immediate rejection with no explanation. Why? Because, investors are very busy and only interested in only the most well developed and presented investment opportunities. Something that is not well thought through and or properly presented will not get their attention or their monies.  This should be understood by all entrepreneurs that approach angel investors or venture capitalists. As such, investors don’t fund start-up companies only to have you figure out what to do next.  They fund you to execute a well thought through plan.  To accomplish this, you need to do your planning, develop a business plan and be ready to execute.  If you do this, you will greatly improve your potential for not only getting potential investor’s attention, and you will also increase your chances of receiving funding from these same investors.

Do Your Planning

Doing planning is the most important and time consuming, arduous task an entrepreneur needs to take on.  This is something you need to do early, as waiting to do your appropriate planning will only send your start-up company in the wrong direction and require you start over, causing you to lose valuable time.  Planning is difficult for most entrepreneurs, as more often than not they want to start writing their business plan day one.  This is a huge mistake, because if you do not have the appropriate information, at your disposal, you will not come to the right conclusions regarding how, and in what direction to move your start-up company and its technology, product or service offering forward. Therefore, take up to two months to properly research and secure the appropriate information that will help you develop a well thought through business plan.  This includes:

• Determining your proprietary technology, product or service offering,
• Identifying the general trends and strategic opportunistic needs of the market,
• Identifying a set of target markets and their growth projections,
• Analyzing the competitors within your targeted markets,
• Developing basic market entry strategy and tactics, and
• Understanding the basic financial model of the targeted markets.

By spending the appropriate amount of time doing your planning up front, you will develop a vision, focus, and direction for your start-up company. On the other hand, if you expect potential investors to fund you to do this early planning work, you will be sadly disappointed.

Develop a Business Plan

After you have spent the time to appropriately plan the early stages of your start-up company, you need to put together a well thought through business plan that takes in all of this planning information. This plan will be much easier to write at this point because you have taken the time to secure the necessary information.  Now, you just need to take the necessary time to put it on paper.  This is also a very big task, and it again will take a significant amount of time and effort. But, if and until, you put your business plan on paper, your start-up company will remain “in the ether”.  As, it is only when you begin to put your business plan on paper do you have the ability to identify issues, holes and other items that need to be addressed to complete your business plan. So, take the necessary time to develop a will presented and thought through business plan, you will learn a lot in the process and many times provide yourself will essential insights on how and in which direction to move your start-up company forward.  Finally, ignore those individuals that tell you that today investors do not read business plans.  While, in some cases, this may be true, it should be remembered the writing and development of a well thought thorough business plan will again provide you with the necessary insights that will provide your start-up company with significant advantages when you finally go to market.  Remember, take the time to develop a well thought through business plan it will serve you well when you go to secure funding from potential investors.

Be Ready To Execute

By the time you begin to talk with investors, you should be ready to execute your business plan. To be ready for this, you need to have:

• Identified and talked with your target customers,
• Secured a well seasoned “A- level” executive team,
• Secured relationships with any necessary strategic partners, and
• Developed a well thought through and developed go to market strategy and associated tactics.

By doing this you will have identified many, if not most of the issues that could possibly cause your start-up company to stumble out of the gate.  You will also have put your start-up company in a strong competitive position which will allow you to execute and rapidly secure customers and revenue. This will impress your potential investors and get their attention.  Remember, investors do not fund you to figure things out, they fund you to execute.

Most entrepreneurs come to investors with an “idea” or “concept”, only looking to receive investor’s monies to allow them to figure out what to do next.    This is a very misplaced approach and is guaranteed to turn investors off.  By taking the time up front and putting the effort to do your planning, develop a business plan, and being ready to execute you will impress your investors and more than likely get their attention.  In addition, by doing so, you are not expecting investors to fund you to figure things out, but putting your start-up company in the best position to receive funding from potential investors.  So, get in there and do the necessary work up front, it will serve you well when you begin talking with potential investors.

I have met a million start-up companies that say they need venture capital to get going.  Many of these same start-up companies have accomplished a lot in a short period of time, and with little money.  But, at the same time, these start-up companies are not ready or prepared for venture capital funding. Why, because they do not have a cogent business plan that will stand up to the rigors of the venture capitalists.  What often they have is a concept or even once in a while, a working prototype, but they often do not have a plan that outlines how they are going to spend the required monies and what financial returns the venture capitalists can expect to get for their investment. At this point, many of these same entrepreneurs are stuck. They have a compelling concept or even a prototype, but they do not have a way forward to secure funding.  What they often need is someone, who has experience in fund raising to come in as the CEO of the company and provide the leadership required to move the company forward in secure funding.  This article outlines several of the near term leadership-related issues this new CEO needs to address to get the start-up company moving forward to securing funding.

Set the Expectations for the Team

The first thing the new CEO needs to do is to set the expectations for the team.  This includes outlining what investors are looking for from the executive team and their start-up company. Too often, start-up companies and their executive teams have an unrealistic expectation of what it takes to secure venture funding or even what is expected from venture capital investors. This needs to be cleared up at the start.  Venture capitalists are a tough group from which to secure funding, and statistically these same investors only typically invest in 3 out 100 start-up companies they review.  Therefore, the conclusion one should come to here is that venture capitalists are looking for something that is really unique with the ability to create a substantial impact in the market.  Anything less will not get their attention.  Even with these characteristics, there are many start-up companies that do not get funded, due to many other reasons, including a bad executive team, no real go to market strategy, etc.

In addition, many entrepreneurs do not really know or understand the amount of work and effort that is required to get from where they are to securing venture capital funding.  So, it is also important to set the work-related expectations for the executive team up front.  They need to understand the raising money is hard work and it requires a substantial amount of effort over a prolonged period of time from all of the team members, not just one or two, members of this same executive team.  So remember, setting the venture funding expectations up front will help lead the team through the funding process.

Define the Near Term Funding Goals

The most important near term goal the new CEO can set is to develop a business plan that is sellable to venture community.  Having a great business concept of even a prototype will not necessarily provide the path forward to securing funding from venture capitalists. So, here as the leader of the start-up company, you need to set the near term goals for the company.  This necessarily includes developing an investor focused business plan, but in addition it can include:

• Creating an appropriate strategy and focus for the start-up company,
• Defining the appropriate product offering as required by the market,
• Determining the start-up company’s financial model,
• Securing the appropriate partners to provide a complete product offering,
• Calling customers and getting real feedback on your product offering,

In addition to the above, many other things need to be addressed.  The point here is that while you are developing an investor focused business plan, as the leader of the company, you need to address all of the necessary things that will make your start-up company successful. Having done your homework and accomplished these near term goals will provide you with a much more complete business plan and provide your investors with the necessary confidence in your start-up company and your team.

Assign and Execute the Associated Tasks

Nothing ever gets accomplished unless the team is pulling together in the same direction. Here, as the leader of the start-up company and its executive management team you need to assign tasks, with associated delivery dates, to these same team members. More often than not, each team member will have an appropriate skill set that can be used to not only help develop your investor focused business plan, but to open the necessary doors to secure the right resources, get into the right customers, and target the necessary potential strategic partners, etc.  All of these things need to be accomplished in parallel and it is often a daunting task. But, with a committed team and the appropriate leadership, the assignment and the execution of these same tasks possible in a defined time frame.  By going through this, the team will also necessarily become closer, as they are working toward to same goal of securing funding for their start-up company. So, as the leader of the team you not only have the responsibility of assigning the tasks, you necessarily have the same responsibility to see that these tasks get executed on time. This will allow you to not only deliver an investor focused business plan, but provide a complete picture of how and why your start-up company and its team will be successful in the market.

Too often start-up companies claim they need funding to be successful, but have no idea how to secure this funding.  With a great concept or even a working prototype, these same start-up companies often lack direction or the ability to secure the necessary funding to move forward.  To move to the next step, these same start-up companies often need to hire a CEO, with funding experience, to provide the leadership to guide their start-up company through the funding process. Here, the near term leadership responsibilities, as defined here, include setting the appropriate funding-related expectations for the executive team, defining the near term funding goals, and assigning and executing the appropriate tasks.  With this new leadership, the start-up company and its executive team have a much higher potential for success in securing funding and ultimately being a force in the market.